Monday Monday

Big day for the bears! There were 320 new listings today and 156 sales, for a sell/list of 48.75%.

There were 122 price changes.

Inventory in my target area rose to 12,039, while over 90s jumped, reaching 2,228, a percentage of 18.51%.

The 14 day rolling sell/list fell to 70.69%.

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55 Comments

Filed under Daily Numbers

55 responses to “Monday Monday

  1. CheapMan

    Is it possible for the commentators to disclose their situation as being an OWNER, a RENTER, a REALTOR or whatever else that is related to the real estate and shows the angel of their point of view? It must be related; so, please, do not write stuff like SINGLE, TEACHER, DRIVER, ATTRACTIVE, OBESE, TRANS and alike which are not directly related to the real estate.

    to be the first, I am an ex-owner now a renter.

  2. WoW

    Recent ex-owner, now a renter on westside…..and a bear, but open minded to all views – guess u could say I go both ways…

  3. coco

    May retail sales soar, interest rate hike definate for September. Analysts now stating BOC will probably raise rates several times after September if retail sales numbers are high in June and July.

    http://tinyurl.com/33yq8h

    Also recent ex-owner now renter. Looking, but now considering waiting for more interest rate hikes to kick in.

  4. coco

    Noticed that property managers have been raising their monthly fees, so strata fees are going up. Increasing strata fees and increasing interest rates, not a good mix.

  5. Finallyaffordable

    Yeh baby!

    thats what I am talking about…….

  6. deb

    Ex-owner, now housesitting on the Sunshine Coast and Vancouver Island. Have been doing this for 8 months and loving it; while looking for a place to buy at a great price.

    We have the luxury of taking our time to buy which is great, while things change in real estate.

    We sold a bit early last September and missed out on the last few months increase, but que sera, sera.
    Having a great time waiting out this storm.

  7. blueskies

    sold all holdings and now renting downtown Vancouver.. …. watching with horrid fascination the events unfolding down south…..

  8. househunter

    blueskies, WoW, deb. ALl of you sold and now holding on? That is dangerous! I am an in the closet bear but you have to admit that you could be holding out for quite some time? Maybe I’m wrong in being afraid of doing that because I have a family. Going from a house to a rental property would cost me at least $3500 per month on the Westside. At that burn rate, it looks risky to me to sell all assets and wait for a correction.

  9. coco

    After I sold my condo the strata fees in our building went up $52.00 more per month. When people are stretched to the limit already with their mortgage payments even an extra $52.00 a month doesn’t come easy. People I run into from the building keep telling me I sold at the right time.

  10. blueskies

    we are renting a 2bd/2ba for $1600/mnth pet friendly. according to our calculations our investor landlord is out of pocket by $200 per month based on selling price in ’05

    we haven’t rented since 1981 so this is a big change. we lived through the 1981 boom/bust in Calgary and learned a lot. the exact same mentality is now prevalent here, “it can’t go down”….
    so we took the money off the table and ran….

    now we batten down the hatches and watch.

  11. Anonymous

    Househunter,

    What is risky to you may not be risky to another, I guess it depends on a person’s financial cushion. I also doubt the renters are even paying anywhere close to $3500.00 per month to rent. Their too prudent/frugal.

  12. Johnnyrent

    Well, my moniker gives a lot away. Sold on the Westside in late 2005. Have missed out on significant appreciation however happily this has been more than covered by investment gains, after tax, after incremental rental costs.

    Have a long term lease on a Westside house which is worth about 5-600 times what we pay in rent per month. Plan to buy back in in late 2009 (nothing to do with Olympics) at which time I’m expecting a very different market than we have now.

  13. WoW

    Westside rent – you can do fairly well in the $2800-$3000 range.

  14. househunter

    Good point. I was thinking for an equal home but what I should be thinking is, what can I live with … but I have an entire family which means I would have to rent outside of Vancouver to find a decent rental home at a good rate while I wait. Tough decision.

  15. deb

    well housesitting isn’t costing us much. We have been in Sechelt, Halfmoon Bay, Roberts Creek, Cowichan Bay, Metchosin, Powell River and are moving on to Comox.

    Having a great time and living in lovely homes. It is just a great time in our lives to be doing this. Just dh and I , no kids and I come to Vancouver once a month to work for a few days, excluding the summer months.

    Let’s see how it all pans out. There ARE rather a lot of us waiting aren’t there?

    How the Sunshine Coast plays out might be different from Vancouver, but only time will tell.

  16. blueskies

    the way I see it is psychology and cheap easy money drove the market up but a liquidity “event” will take the whole thing down, when and how bad I doubt anyone knows.

    now is not the time to buy… sorry Rob 🙂

  17. DTVan

    Very interesting comments from the ex owners.

    At what point do you people buy back in? How much of a discount would you need from today (10%, 25%, 50%)?

    What down payment would you expect to make in order to be even/neutral with renting to consider the market attractive again (40%, 25%, 10%, 0%)?

    How many people out there are doing the same thing? Anyone know of many others doing this? In past boom busts or even today I have never known anyone to do this intentionally.

    BTW I own my principle residence and had sold an investment property in late 2006.

  18. spectralshift

    Bought cheap and below means at the start of 2006. Holding onto it. Entertained the thought of selling and renting, combination of events and a quick 10 year model showing my loss in the event of a downturn wasn’t significant relative to the “loss” if the markets rose or stayed neutral… even before calculating the cost of churning in real estate. Probably will sell in the 5-10 years from present, or rent it out if the market makes that a reasonable option.

    Funny enough, knowing that the markets are still stable, rents are rising and quite a few people are speculating by selling and renting makes me a bit more confident in reducing the probability of the more drastic (50%+) correction scenarios. What remains a concern is the affordability and macro issues. That would wash out any pent up demand anyway. Together – a shock without room to absorb it – they could be significant.

  19. Fozzie

    We are renting a 2bdr in lower lonsdale for $925/month. Old somewhat dumpy building as you might imagine at that price, but we are on the top floor facing south and have a million $$ view.

    Three years ago my wife (then girlfriend) had a student loan and we had no savings, which meant negative net worth. We were not in a position to buy anything.

    Since then we have paid off all debts, saved a $105K down payment fund and paid $20K cash for a vehicle upgrade when our daughter was born.

    I generally think we have done pretty well financially, and I would have expected that our hard work, sacrifice and diligent saving would have given us more options. Unfortunately, real estate values have soared during this time (as you all know) and rather than getting ahead we feel like we’ve fallen behind. Can be a tad discouraging at times.

    I like to believe those that predict a correction in the near term, but I’m no longer holding my breath. We can stay put for a while, but will likely need to buy something before our family expands. I just dread the thought that this will be on the eve of the “Great Correction”.

  20. paulb

    With interest rates continuing to climb its impossible to avoid a slow release of air from our market bubble. That or a quick pop!

  21. robchipman

    In direct response to Cheapman’s post:

    I’m a Realtor (surprise,surprise), I own my own home and I own a few rentals.

    I’m not selling the principal residence because I don’t like to think of it as an investment; I like where I live and will do what it takes to stay there. From that pov I don’t care what the market does. That property is as valuble to me at $100,000 as it is at $1 million.

    I’m not selling the rental properties because by nature I’m an acquisator, and not a trader. I’m holding them for my retirement (my pension plan starts at the end of my right arm! 🙂 ) I want to get more properties, and if I can’t acquire more here I’ll get some more somewhere else.

    From the pov of a property holder, a rising market is great, but its also a pain. Its tough for me to acquire more property here on the basis that I like. The rents lag the values (although values are dragging rents up). If I already owned as much as I require then the rising market would be great. I’m not there yet. A 5% increase per year would suit me fine.

    From my business pov, a hot market is a challenge. Fewer investors can buy. Again, long term, I’d be satisfied with 5% per year.

  22. Coq_Mike

    Fozzie:

    There seems to be many people in your exact situation. It sure would be interesting to know how large this pool of people has become.

    Question for you:

    If you started to see market prices drop, at what point do you think you would buy? Or would you still consider buying in the current market?

    I would be interested in knowing what your strategy is going to be?

  23. Dyugle

    I am a renter.
    I am a stockmarket investor.
    I am short U.S. realestate with a small bet.
    I am long gold plays with a small bet.
    I am heavily into Canadian 90 day T-bills.
    I have $$ but will not buy till after the BOC lowers interest rates for about a year.
    I see a US recession starting anytime between now and next summer. If this doesn’t happen then I see a whole lot of inflation and interest rates going up a lot higher. Hence my bet on the short end of the yield curve and the gold stocks. I am not sure of any of this so I am staying as liquid and secure as I can till I get a clearer image.
    That, in a nutshell, is my current position in this market.

  24. FTB

    Hello,
    I read this blog faithfully, but never post anything. I’m not trying to hide, I’m just more of a listener by nature. I when I read CheapMan’s post I thought I’d identify myself, because I’m sure I represent a large silent audience. I am a renter. My husband and I have been watching the market for several years. We are savers by nature, so even though we have watched prices rise, every year we have a larger down payment and that makes the steep increases a little more bearable (no pun intended). We pay $1140 for a huge 2 bedroom in the best part of Kits. We have a great landlord and our rent has only been increased once in 5 years. We are waiting to buy until the market corrects a bit (levels off, drops, or whatever else the correction will be). If a correction never comes I guess we will just keep saving until we have enough to buy a home outright and be done with it. Right now it makes so much sense for us to rent. Thanks to all the bloggers for sharing their thoughts and pov’s. And thanks to Rob for running this forum – I have always had a negative opinion and innate distrust of realtors, and you have definitely changed that for me.

  25. joe blfzk

    IDEAL TIME TO SELL???

    Maybe we should not lose sight of the fact that the recent spurt in sales may largely be due to pre-approved mortgage applicants jumping in to take advantage of substantially lower rates from about 6 weeks ago.

    Let’s not forget, that the market came pretty close to the cliff last fall without the additional burdens like exhaustion of pre-approved buyers and subprime turmoil.

    Countrywide Financial Corp, the largest US mortgage lender sent shockwaves through the financial markets today by reporting the biggest plunge in 15 years.

    With the subbprime turmoil growing by the week, and inventory exploding in areas like Seattle and Edmonton (just to name a couple), the downside must surely outweigh the upside.

  26. Fozzie

    Coq_Mike,

    Good questions. I agree with your comment that there seems to be a fair number of people in my situation. For example, FTB’s circumstances sound quite familiar.

    My strategy has been a work in progress. If you had asked me 4 years ago I would certainly have thought I would be a home-owner by now. However, since I started saving 3 years ago the real estate market has rocketed through the stratosphere and my $40K/year savings has not been able to keep up. I apologize for the cynicism, but it’s hard for me to get the taste of sour grapes out of my mouth 🙂

    So, what do I do now? I think this market is priced for perfection. As long as all the variables remain “perfect”, the market will likely remain strong. But, markets/economies don’t remain perfect indefinitely. Now that I have waited this long, I feel somewhat committed to the “save and wait” strategy. Eventually the market will cool (if not crash) and I will be able to catch up at least a bit.

    That being said, life circumstances may require me to make a move before the market does. Either my wife’s kind patience will expire and/or baby #2 will arrive. At that point, my options will be rent something bigger or jump in and buy . The latter is more likely, simply because we will want to move on with our lives and be done with this whole issue. However, I will definitely not be stretching myself if and when I buy. I believe conventional wisdom says buy as much house as you can afford, but I can’t see myself adopting that approach if I still believe the market is priced for perfection.

    I’d appreciate any feedback on this.

  27. Ryan

    Rob please could you post more detailed numbers even on bear days? It’s your blog so you can do whatever you want but it would be appreciated.

  28. Kattie

    We bought our small house in Surrey at 1999 and planed to upgrade in about 5 years. After 5 years, at 2004, the house market was hot and we decided to wait it out. We should have upgraded then, but because we didn’t, I don’t think it’s wise to upgrade now. I have also played with the idea of sell and rent and decided the possible financial advantage is not worth the reduction in life quality and moving troubles. Also, who knows how long you have to wait if you sell and rent. What if the bubble will not burst, but just slowly release the air?

  29. Vancouverite

    Hi there,

    I rarely post on this board, but I read it daily. My husband and I currently live in the UK and are planning on returning to the Fraser Valley this August. We have a sizeable downpayment that we have managed to save in the past couple of years. We were hoping to buy something this fall. We are first time buyers. We left Vancouver in 2003 and cannot believe how much prices have risen. We would have most likely brought something if we were living there, but we weren’t. We have rented since being in the UK, which probably wasn’t the best idea but the market here is terribly overinflated and we never really knew when we planned to leave.
    In the UK almost everyone I know that has purchased a house recently has lied about their income and has taken out up to 7 times their salary. Subprime mortgages here are out of hand.

  30. robchipman

    Ryan:

    Detail doesn’t depend on bear/bull days. It depends on how I feel (as in tired or not!) Last night, for example, I really didn’t feel like crunching all the numbers (after work I worked on my house and then played hockey, and got home around 10:30).

    Don’t worry, though…I feel guilty when I don’t post the full meal deal :-)!

    Kattie:
    Tough position. You remind me of a friend we bought and sold for last summer. Bought the house they want to stay in in North Van, then sold the inferior house they owned in South Burnaby. You’ll recall that prices stalled for a bit at that time, so we were all a little jumpy (did we have the reverse Midas touch?)

    Your thinking is probably sound, but here’s a little food for thought (if you haven’t thought about it already). Trading up is usually better in adown market (you lose 20% on a smaller number but you’re buying a bigger number that also has 20% off), but, if your current house isn’t the easiest to sell (small, busy street, outdated, etc), it might be markedly harder to sell in a down market, so you might lose more than the 20% on the sale, and so lose ground. (20% is just for the sake of argument, btw – who knows what kind of correction we’ll see?)

  31. RWM

    I own two homes in North Vancouver. Bought one in 1999 and one in 2004. Considering buying another home in the 1 Million range. Would you consider me nuts if I did? Why or why not? Discuss.

  32. Kattie

    Rob,

    That’s a very good point. Yes, I have thought about that, too. I am not very worried about it. First, I believe our house should not be that difficult to sell. It’s small but cute and cozy, with three bedrooms, should be an ideal house for FTB. Actually last year somebody offered to buy our house just because he really loved it. I was really tempted to sell it at that time. Second, if bad turns worse, we will just buy a new house and keep the old house for a while. We are mortgage free on our current house and should have no problem to keep two houses if we have to.

  33. robchipman

    Buy a new house and keep the old one? I love your thinking. 3 bedrooms is good (2 or less would equal inferior, imho). Being mortgage free is also excellent. I’d arrange some sort of mortgage financing on the house now, at todays values, just in case, with the key feature being that it is readvanceable. Don’t draw down the proceeds – keep it at zero and you’ll have no costs, but if you want to buy a new place at some time in the future you can easily mortgage your new investment property and use the funds to offset your principal home purchase and incurr an interest expense (check with a tax accountant, but I know a lot of people do exactly that).

  34. Snick

    “Would you consider me nuts if I did? Why or why not?” – RWM

    Obviously, YOU have some doubts yourself. Discuss.

  35. ObserverX

    househunter, you say you’d be “out $3500/mth” by selling and renting. Question: How much investment income would you generate from selling your house and would that cover the $3500/mth so that you are not “out” anything at all?

  36. investah

    I totally agree with the warning from joe blfsk.

    It might be wise for anyone considering selling or downsizing not to wait until the flood of pre-approved buyers dries up, which could coincide with the normal late summer slowdown of sales.

    As an investor, I can’t immagine anyone ignoring the turmoil in the US, and trying to milk the last drop out of this market that is surely stretched to the limit.

    On a day when the TSE drops 400 points, it’s ironic that 4 out of the 9 main topics on http://www.bloomberg.com are tied to the housing disaster in the US.

  37. Snick

    “I totally agree with the warning from joe blfsk.”
    – investah

    …er, me too.

  38. -A-

    Rob, just an observation, some of your new posters sound phony.

  39. Mightymouse

    Sold in 2005. I got laid off when the company I worked for went bankrupt. I used the little bit of money I earned in real-estate to invest in my own company. Fortunately, it worked out. Now I’m in a good position to buy again but I just don’t see the value.

    Recently moved, and I’m very happy with the new rental (great location, yard etc). In fact, I’ve found that I spend less time looking at these forums now that I’m happier with my home. BTW, the landlord let it sit for a couple months trying to decide on whether to cash out or not. In the end he and his wife decided to just rent it out again. The rent we pay is a pittance when compared to what one would have to pay on a mortgage to own this place.

    Our stats: New couple, age: 30-40, 3 kids under four years of age between us. Oh… and really Hot! 😉

  40. robchipman

    -A-:

    “investah” is like you – he changes his tag, but he posts a lot.

    “RWM” – like you, uses more than one tag, posts often.

    “DTVan” is like you…

    “Finallyaffordable” is like you…

    “FTB” has posted twice this month, on different subjects.

    “Vancouverite” is new.

    “Joe blfkz” is new.

    “Kattie” is new. Two posts.

    Three new posters. Joe’s a bear, so you won’t have a problem with him. Vancouverite says subprimes are out of hand in the UK and borrowers are all lying about income, so you’ll be fine with her. Kattie’s not a died in the wool bear, and she does question bubble theology (“What if the bubble will not burst, but just slowly release the air?”) but that’s not enough to really get you mad.

    You’ve got a problem with FTB, don’t you? 🙂

  41. Contrarian

    I’m a vested interest in these very interesting times in that I sold my principal residence and a rental property last year, and am now renting. Both had doubled in value in just 3 years. Even though I had bought before the recent run-up in prices I’ve still been able to reduce my monthly costs by 30-40%.

    When I calculated the capitalization rates for both properties they were under 2%. That was the sign for me to get out.

    I’m bullish on real estate long-term, but bearish short-term. Like Rob I believe the best way to view your home is a place to live not as an investment. Unlike rental properties which generate income, as long as they are not cashflow negative like many investing in today’s market.

    OT – I’m currently reading the classic “Manias, Panics and Crashes – A History of Financial Crises” by Charles Kindleberger. I’d recommend it, you’ll find a lot of similarities with today’s real estate / financial markets and events in the past. It’s all about the credit!

  42. This must have been posted before, but who’s got the long term (decadal) rent and mortgages versus income stats? A bubble, for necessities, can only be defined by price in relation to income. I’d be curious to see how it lays out since, say, the 50’s or 60’s. My guess wold be that rent is relatively cheap, and mortgages probably expensive, but not dramatically so. Anyone out there (maybe VHB had it) got this stuff?
    Glad summer is back.

  43. WoW

    Books – I recommend “Empire of Debt” – a recent book about the debt/housing picture in the US.

    Also, “Atlas Shrugged”, of course…

  44. tqn

    “Rob, just an observation, some of your new posters sound phony.”

    is it? because they dont meet your point of views?

  45. coco

    Rob,

    You claim the same posters are posting under a few different names, but different people from the same household can post on the same blog. My internet is included in my rent and several people rent out different levels in this house and their internet is included in the rent too. We have discussed your blog and I have no idea if the other people that live here are posting too, although to you it could look like the same person posting under a different alias, when it actually could be a totally different person.

  46. househunter

    ObserverX – It would be close to covering the cost of a $3500 rent. Maybe a couple of hundred dollars out of pocket .. .depends on what I invest in. What I like is not paying $4,500 in taxes every year. I’ve been programmed from a young age to never rent … even though the numbers are working out for the renters right now! ahhhhh! I’m torn but I will make a decision before this bubble bursts (I hope).

  47. real estate hmmm

    Rob, I was talking with my realiter and Im going to by a shop (figure i should do somthing with my money )we were talking about this market seems some people think the market is going to get higher after the 2010 after everone sees how nice its here, if thats to belief how come after expo86 the market came down in 1991 people decided to move?(probaly because they didnt like the rain)Rob do you think that will happen again?

  48. ObserverX

    househunter, I’m a little surprised that you’d only break even (excluding the $4500 tax savings). I suppose it depends quite a bit on your marginal tax rate. Also, would your current place rent at, above, or below $3500/mth? Just wondering if your target rent represents an upgrade or downgrade to quality of life (which should be factored into the decision).

  49. ObserverX

    Today’s report from the U.S.:

    http://tinyurl.com/ypkplu

    I noticed that Rob got quoted:

    “This is a pretty good time to buy or sell a house,”

    … oops! That was actually Tom Kunz, CEO of Century 21. It sure sounded like Rob … oh well. LOL

  50. spectralshift

    ObserverX,

    What assumptions do you make when working out if it would be profitable to rent on investment income? Looking at renting at $3500, I think you’d need over a million dollars to break even(6.5% return, 30% marginal rate is just under 1 mil).

    If I was to act, I’d be looking at higher than 30% marginal rate (and I don’t make that much, adding 42,000 to your income makes your marginal rate about 30% alone!) and probably wouldn’t depend on getting 6.5% in secured capital with monthly (or regular) payouts… That’s why I haven’t done it. Am I overlooking something? (Besides taxes and maintenance, which I have in my own model.)

  51. robchipman

    coco:

    IPs are specific to the computer, not the provider. Different posters on the same cpu could have the same IP, but posters in the same house on different computers (whether the posters are the same or different) have different IPs. I use several computers, for example, so my handle comes up with various IPs depending on where I post from in the day.

    Anyway, who cares? Lots of people change their handles. It s not a big deal to me. Same IP, same style of comment, different handle? Probably the same person. -A- is saying that some new posters are not real, based on what they say. I’d bet he’s unhappy with FTB saying her opinion of Realtors has changed since reading this blog, and that he suspects that I’ve planted that comment. (I’m pretty sure he’s gone down that path before; certainly others have as well).

  52. Noname

    Rob said – “Different posters on the same cpu could have the same IP, but posters in the same house on different computers (whether the posters are the same or different) have different IPs.”

    Not if they are behind the same router. One router, one ip for many computers.

    Noname

  53. robchipman

    Right you are, noname. Coco, I stand corrected.

  54. ObserverX

    spectral, I was using numbers over $1M — hh stated they’re on the Westside in a house suitable for a family so I assumed their house must be worth $1+M.

    Just re-looking, I see that hh says their property tax is $4500 which corresponds to places that sell in the range $1.2M – $1.4M.

    If you figure a 5% GIC on $1.3M and a 35% marginal tax rate, that gives you $3520/mth.

    The question still remains whether hh needs to pay $3500/mth to get the same QoL. For example $2900/mth gets this place:

    http://tinyurl.com/36gfoq

    which seems like a pretty nice place for raising a family.

  55. spectralshift

    ObserverX,

    Ah, gotcha. Sometimes I forget how ridiculous the prices on the westside are… Seems like it would make sense, if you can find that rental place equivalent, to rent. Hmmph, something is a little bit out of whack when you can save money with the taxes and return stacked against you.

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